New build in Vegas

[Lawrence Ng]

Hi does anyone know of a builder in Vegas? 
I saw an ad for touchstone living offering 3.99 fixed interest for a new build town house. The deal seems pretty good with that interest rate. Only thing is owner occupancy for first year and $300/month HOA(water, garbage, sewer, 1gb internet, landscaping) so I think HOA is worth it. Does anyone have any insight on them? Also if you can recommend any new builders offering this fixed rate and covers closing costs

[Eric Fernwood]

Hello @Lawrence Ng,

A low interest rate does not guarantee a good investment. For example, if a property attracts tenants who stay only one or two years, or if it takes a long time to rent, you will lose money. (Based on our experience dealing with builders in Vegas, a low promotional rate rarely lasts 30 years.) Add a $300/month HOA, and the losses can add up quickly.

Other considerations

New construction has additional drawbacks. Property taxes are typically higher—around 1% versus about 0.55% average for the properties we target. On a $400,000 property, that’s an extra $1,800 per year, or $150 per month more in property taxes, permanently. Future tax increases also start from this higher base.

Many of our properties are in HOAs, and the average fee is about $50 per month. Compared to a $300 HOA, that's an extra $250 per month in costs.

Now compare that to the mortgage payment difference on a $400,000 property with 25% down and a 30-year loan:

• 3.99% interest: about $1,430/month
• 6.25% interest: about $1,847/month
• Difference: $416/month

That lower mortgage payment is largely offset by:

• Higher property taxes: $150/month
• Higher HOA fees: $250/month

You also mentioned that the HOA covers water, sewer, trash, internet, and landscaping. On our properties, tenants pay all utilities and handle landscaping, so there's no financial advantage to you paying these expenses.

Finally, townhomes typically have shorter tenant stays, which leads to higher vacancy and turnover costs. You will need to factor that in.